● _*Sunday ki Pathashala*_ ●
*Knowledge is power.*
• *_Financial Literacy Series_*
02-Feb.-2025
Smart Beta or Smart Marketing? A Wake-Up Call for Investors
In the last few years, we've seen a surge of "smart beta" strategies promising to outperform traditional indices. With terms like value, alpha, low volatility, and quality, these products seem tailor-made to weather different market environments. But when the markets turn rough, their numbers tell a different story.
Consider this recent performance:
• Nifty 50: -12.63%
• Nifty 50 Value: -12.24%
Shouldn't value outperform in falling markets?
• Nifty Alpha 50: -23.83%
If Alpha can't outperform in a downturn, is it really Alpha?
• Nifty 50 EW: -15.54%
• Equal weight fell harder than the weighted index—so much for diversification.
• Alpha LV 30: -19.32%
Low volatility? Clearly, not this time.
• Nifty 100 Q 30: -15.83%
Quality is supposed to offer resilience—yet it lagged the broader Nifty 100 (-14.25%).
What this reveals is simple:
What worked in the past won't necessarily work in the future.
Markets evolve, and blindly following strategies based on historical data or back-tested brilliance is a recipe for disappointment.
Investing Needs Both Art and Science
Great investing isn't just about formulas and factors. It's a blend of:
• The Science:
Data, quantitative analysis, and rigorous research.
• The Art:
Judgment, experience, intuition, and adaptability to changing dynamics.
These "smart" strategies reduce investing to just the science.
But investing is about more than mathematics. It requires understanding the broader picture—macro shifts, market psychology, and human behavior.
What Should Investors Do?
1. Avoid the allure of cleverly marketed strategies promising outperformance.
2. Stick to the basics—diversification, patience, and disciplined SIPs.
3. Focus on time-tested principles instead of chasing momentum, quality, or value without context.
4. Remember, long-term success requires a balanced approach—not blind faith in either art or science.
The numbers above are a stark reminder:
Investing isn't just about smart names and strategies. It's about staying grounded in fundamentals.
On top of all, these are were marketed as low cost / smart beta strategies.
Just for record , we have avoided all the temptation to suggest these strategies reduce!
Need Help?
Contact us to understand these nuances and much more.
*Author: ~Vijai Mantri*
Investments are subject to market risk. Consult Your Financial Advisor (Wealth Doctor) before Investing & Regularly for Portfolio Check-up...
*"Sunday Ki Pathashala" is initiative by: - Hitesh R. Pujara*
